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Braskem is in Overbought Territory: What???s Next?

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Braskem S.A. (BAK - Free Report) has moved higher as of late, but there could definitely be trouble on the horizon for this company. That is because BAK is now in overbought territory with an RSI value of 74.81.

What is RSI?

RSI stands for ‘Relative Strength Index’ and it is a popular indicator used by technically focused investors. It compares the average of gains in days that closed up to the average of losses in days that closed down; readings above 70 suggest an asset is overbought, while an RSI below 30 suggests undervalued conditions are present.

Other Factors

Yet BAK’s high RSI value isn’t the only reason for investors to be concerned, as there has been some decidedly negative earnings estimate revisions Braskem’s stock as of late. This is especially true when investors dive into some of these revisions in order to get a better picture of BAK’s prospects for the near term.

Over the past one month, investors have witnessed 1 earnings estimate revision lower compared to none higher for the current year. The consensus estimate for BAK’s has also been on a downward trend over the same time period too, as the estimates have fallen nearly 17% over the last two months.

If this wasn’t enough, Braskem also has a Zacks Rank #5 (Strong Sell)which puts it into unfortunate company among its peers. So, given all of these factors, investors may want to consider exiting this stock now before it falls back to Earth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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